New Delhi: To increase credit flow to the slowdown affected micro-enterprises an inter-ministerial group has favoured reserving 6 per cent of the total priority sector lending of banks to such firms, a top MSME official said on Wednesday.
"There was an inter-ministerial group which had agreed
that around 6 per cent of priority sector lending should be
reserved for micro sector," Micro, Small and Medium
Enterprises (MSME) Secretary Dinesh Rai told reporters here.
At present, banks are required to give at least 40 per
cent of their total loan disbursal to the priority sector
which includes the micro-institutions in the country. However,
there is no specified credit limit for such units as of now.
The group's decision has to be approved by the RBI and
the Finance Ministry. However, "this is yet to be approved by
the RBI and the Finance Ministry," he said.
About 42 million small and medium sized companies are
operating in the country and employ about 13 million people.
They contribute nearly 40 per cent to the total exports and
45 per cent to the manufacturing output in India.
The Budget 2009-10 has proposed to facilitate flow of
credit at reasonable rates by providing a special fund of Rs
4,000 crore for the MSME sector.
With credit drying up in the wake of the global financial
crisis the sector is complaining about the affordability of
loans, given high interest rates.
Bureau Report
First Published: Wednesday, July 22, 2009, 18:03